Restaurant operators are always searching for new and fresh ideas that will attract more customers. The goal is clear: enhance the customer experience, make sure the marketing objectives are met and that the campaign produces profitable returns.
Promotion = Sales... Right?
But did your last restaurant promotion increase profits? It may have increased sales but did profits increase? If, for example, you're selling pricier dishes or your servers are upselling certain items, does that always lead to higher profits? Not necessarily. But how do you know for sure? You don't know what you don't know.
From preparation to implementation to analyzing the outcome, the process of a promotion has to come full circle in order to make it successful.
The promo process
First and foremost, you have to decide who is running the promo in your restaurant business. Is it the Marketing team or the Operations team? This is because the goals can be quite different, and the results vary as well. Regardless of who is in charge of the promo, you need to look at three periods when analyzing the success of the promotion — before, during and after.
You must calculate costs for the restaurant promotion and thus avoid impractical strategies such as big discounts or excessive loss. You want to understand the bigger picture. In order to assess profit, you need to integrate a few additional factors, such as:
- Food cost.
- Labor cost.
- Day parts.
- And incremental profit margin
Merging all of this information can help you get better insight into your campaign's success. The bottom line is you need to include your Point of Sale data and food costing data in the same solution.
So now that you've completed your promo campaign, it's important to determine the outcome of the product promotion. Often, techniques such as product mix in the restaurant industry are studied for measuring the campaign's success. Did that promo permanently increase sales for this item? It may look like this promo was successful; however, a more thorough market basket analysis may prove otherwise.
Another example comes to mind. Recently, a friend mentioned a similar business lesson she learned the hard way. It seemed her kids wanted to have a lemonade stand. Nothing wrong with a little entrepreneurship and learning early on about best business practices, she thought. Mom enthusiastically agreed. The sale yielded a whopping $15! The kids were so proud! Meanwhile, mom was dismayed as she studied the aftermath a bit closer.
After driving to and from the store to buy 4 pounds of lemons, a bag of sugar, plastic cups, using gas and more than three hours of her precious time making the lemonade and helping the kids with the signs and set up, Mom was out $45! Definitely not a successful experiment! But one can easily see by this simple example that knowing all of the pieces of the promotion puzzle are important to measure the true success of a promotion.
Kira Weinstein contributed to this story.
Photo source: istock.com
/ With prior experience with Dunkin’ Brands and IBM Global Services, Dave Bennett has led Mirus through its formative years and its current growth phase. Dave holds a B.S. in Business Administration and MBA from Northeastern University.